Renaissance

Buying individual stocks is a crap shoot, but the market itself is the best leading indicator around. Every investor should know what I’m about to detail.

Lately it’s been flashing green, having regained all ground lost in 2008-9, and starting to make new highs. Some people, who make their kids wear helmets and use turn signals in parking lots, worry about this. But you shouldn’t.

In case you hadn’t heard, the Dow had gained 11.25% this year and 10.9% in the last twelve months. The S&P 500 is up 10% this year and almost 12% since last March. The NASDAQ has improved 8% in 2013 and 5% in a year. The laggard TSX is ahead 2.5% in the last 90 days, while the Nikkei in Japan has given investors 19.2% this year and 23% over the past year.

These numbers are spectacular, of course. Too bad most Canadians have missed them. Eighty per cent of TFSAs are in cash or cash equivalents, and we have more money in GICs than any other single asset. These days the banks are paying 1.75% on a five-year GIC, which helps explain why most people are screwed. No wonder a Scotiabank survey just found that 64% of people “couldn’t afford” to make an RRSP contribution this year.

Also sad: Seventy per cent of people who do invest have 100% of their money in Canadian assets. Did you notice what the TSX did compared to, say, the S&P? Duh. How can we be so parochial as to not diversify?

But the point of this Easter bunny post is to explain why stock markets are doing what they’re doing. It’s not just speculation, government money-printing, greed, manipulation or high-frequency trading feeding this advance (as all the doomers we keep in this blog’s basement believe). In a word, it’s growth. In another, recovery. Markets will surely correct after one of the best starts to any year on record, but it will likely be temporary. In fact, US markets are still trading about 10% below the long-term average when measured in current corporate profits. That suggests more to come. Lots more.

At the heart of this is the US economy, so massive, diverse and powerful it has the power to eclipse European gasbagging, dictate conditions in China or drag people out of their own wretched decisions. That renaissance would occur was never in doubt, which is why I told you long ago not to bet against America. I hope you followed my suggestions. Or that you start.

Here’s why. A sampling of the latest hard news:

The American economy is 70% comprised of consumer spending. That spending just climbed by the most in five months, reflecting more jobs and confidence.

In fact consumer confidence has scored the biggest advance on record, exceeding all expectations. “Consumers discounted the administration’s warning about economic catastrophe following the cuts in federal spending, and consumers have renewed their expectations that job gains will accelerate in the months ahead,” Bloomberg reported.

Consumers say they feel the best about their personal finances since back in January of 2008.

One reason: jobs. Payrolls grew in 42 states in February and the unemployment rate declined in 22. Employers hired 236,000 people in a month.

Texas alone found 80,600 new jobs, the biggest increase in 31 years.

House prices in 20 American cities jumped an average of 8.1% in the last year, the biggest year-over-year advance since the real estate bubble in 2006. Property values climbed a full 1% in December alone.

Sales of newly-built houses are the best in four years, thanks to record low mortgage rates and more jobs. This is the best two-month showing since the late summer of 2008, and is creating significant jobs for builders, home-reno retailers and furniture stores.

And corporate profits have been robustly growing.

Reports Bloomberg: U.S. corporations’ after-tax profits have grown by 171% under Obama, more than under any president since World War II, and are now at their highest level relative to the size of the economy since the government began keeping records in 1947. Profits are more than twice as high as their peak during President Ronald Reagan’s administration and more than 50% greater than during the late-1990s Internet boom, measured by the size of the economy.

More meaningful, more than 66% of corporations have surpassed their sales estimates.

What this means: Companies are making lots of money not by laying people off and getting efficient but by selling more stuff to confident consumers happy about their job prospects, whose houses and investments are rising in value. This is called “recovery.” It is real. It’s sustainable.

Sure, it’s come at a cost. Government has spent trillions rekindling this growth after an epic blow-off. The overhang of debt will take a generation to reduce and keep growth below where it would normally be. There’ll be structural unemployment, a growing disparity of wealth, and North America’s demographics are negative.

So it’s not the 1950s.

But neither is it 2008. Not a prelude to another fall, but the steady and earned ascent from the last one. Those who understand this, who are careful to have balance and diversity, who see the tectonic shift from real assets to financial ones, will be rewarded. Already are. Courage.

246 comments ↓

In case you hadn’t heard, the Dow had gained 11.25% this year and 10.9% in the last twelve months.
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LOL, So basically you made zero in nominal terms since 2000. And in real terms you are down 80%

LOL.

If, like you, an investor knows nothing about rebalancing. Otherwise, you have doubled money in four years. — Garth

•The American economy is 70% comprised of consumer spending. That spending just climbed by the most in five months, reflecting more jobs and confidence
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LOL. All the jobs since the recession are service sector jobs. Manufacturing jobs are nil. Service sector jobs = selling to one another. Manufacturing jobs = real wealth creation. So America once again is going into debt on mass and learning nothing.

Your blanket generalizations say more about you than anything else. — Garth

Buying individual stocks is the way to go……you can cherry pick the best stocks in their segment. Why buy an ETF and pay any MER even if its .09% (Vanguard)…..Drip your dividends which gives you bear market protection and accelerates returns when the market recovers. Plus you benefits from drip discounts which further accelerate your compounding over long periods of time. Here are some examples

100 shares of JNJ 20 years ago would’ve cost about $6,750. By reinvesting those dividends back into the stock, you’d have over 1200 shares today(as of OCT 2011) worth over $68,000 (10x your original investment) and paying over $2,500 in dividends a year – almost 40% yield on your original investment

Coca-Cola (KO) which is one of the best dividend paying stocks over its history. The company went public in 1919 at $40 a share. Today, each share is worth over $250,000…without dividends reinvested. With the power of compounding dividends, each one of those KO shares is now worth $8.5 million and is throwing off $243,000 a year in dividends.

Your blanket generalizations say more about you than anything else. — Garth

Blanket … Look at the facts Garth. Dig into the “details.” Read the data in front of your nose instead. America is not turning out manufacturing jobs. This is not a sustainable recovery but is again based on consumer debt. Period.

Here is a challenge, can anyone show the other components adding to 100%? My admiration and respect to anyone who can and who can at the same time explain why manufacturing will not be one of the components.

What differences would you suggest in portfolio composition, if any, for someone looking at holding in midterm.

Here’s the situation, the gf and I are not looking to buy anytime soon but its conceivable that in 5 years time we would want to buy our own place. Right now we are being very silly and holding GICs. Problem is, with a shortened timeframe there is concern that when we need the money for a home any investments may be in the red (since there is an inherent risk to fluctuations proportional to timeframe).

Would you suggest more bank preferreds? I really am lost and the most I know is that GICs are not the way to go.

Balanced portfolios, with both fixed income a d growth assets, are designed to lower volatility and risk. Five years is a long time. Get some help. And marry her. — Garth

So basically you made zero in nominal terms since 2000. And in real terms you are down 80%

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GG a couple of problems with your misleading claim. The world did not start in 2000. People invest over time and not just in lump sums in 2000. You forgot dividends. Inflation has been no where near 80% since 2000.

Personally I am up 424% from 2000 through 2012 and another 8% in 2013 (another 8% of 424% that is). North American mid to larger caps have been my weapons of choice. Admittedly the S&P 500 is up little since 2000 even with dividends, but no one invests in only one year like that.

Imagine the people who piled into the market in late 2008 and early 2009. Big gains were made.

Canadian corporate profits have seen similar growth. However, the problem is, a giant amount of capital has been siphoned off to the housing market. The Canadian stock market has suffered substantial P/E multiple compression, and is dirt cheap after the past 6-7 years of stagnation.

At this point, the TSX is a far better buy. The Dow/S&P500 could only reach its new records by hammering interest rates down to 0%, and by draining all the froth out of the housing market. When the same happens in Canada, the TSX easily would be 20,000 or more as an index level.

“Hmm, but my diversified balanced portfolio of dividend bearing ETFs is flat on the year. Guess I should have bought the index instead.”

The yield on the indices, especially the TSX/TSX60 index, are pretty high these days. Was there any particular reason you wanted an explicit “dividend” ETF, instead of just a broad index fund? The MERs are substantially higher on the ‘dividend’ ETFs versus the broad index ones.

Jim Sinclair the CEO of Tanzanian Royalty Exploration Ltd. The company was incorporated in Alberta in 1990, has gone through three changes of name, and been searching for gold in Tanzania for 22 and one-half years now. The company has not paid one nickel of dividends or mined one ounce of gold in the last 22 and one-half years http://seekingalpha.com/article/274256-tanzanian-royalty-exploration-fool-s-gold.
In the summer of 2012 Tanzanian Royalty completed a bought deal financing for $27 million. At the same time they increased the number of people on the board of directors form 9 to 11. Well I guess that will keep the CEO and the members of the BOD in clover for a few more years. Barrons had an article http://online.barrons.com/article/SB123941230924310403.html#articleTabs_article%3D1gently gently reminding the reader that the company was not a gold producer and yet the shares were trading for an unjustifiably high price. They also remarked that Mr. Sinclair was selling shares in the company.
It all sounds vaguely similar to the story of the Canadian politicos, a.k.a. blood sucking, lying vampire leeches. They are always increasing the number of political and bureaucratic hyenas feeding off the taxpayer with new fraudulent exactions at every turn (the carbon tax). And yes Virginia taxes are theft! Two and one-half percent current short term corporate bond yields don’t even cover the real cost of inflation, and that’s before confiscatory 43.7 percent marginal taxation.
In the UK the left wing of the Liberal Democratic Party has raised the issue of the wealth tax. http://www.dailymail.co.uk/news/article-2279810/Now-want-tax-jewellery-New-wealth-tax-plan-target-ALL-assets–including-buy-let-homes.html.
A tax of .5% percent is mooted to be levied on all wealth. For instance your grandmothers sterling silver tea service or heirloom jewelry. Under the proposal the tax authorities will have the right to enter premises without a search warrant any time of the night or day. Confiscatory taxes will be applied in case the findings of the tax inspectorate differ from the individual. Of course it is just a proposal. We know that as soon as it becomes policy then it will be applied in time. Of course the starting tax rate is nothing but the thin edge of the wedge.
“A similar scheme is already in place in France, with the levy paid on all ‘global assets’ including cars, jewellery and investments – with French tax inspectors having the right to enter homes. After his election last year, new Socialist president Francois Hollande more than doubled the main wealth tax rate from 0.25 per cent to 0.55 per cent for anyone with a ‘global fortune’ of between £690,000 and £1.1 million.”
As soon as Jeroen Dijsselbloem said Cyprus Is A ‘Template’ For EU Bailouts http://www.businessinsider.com/dijsselbloem-cyprus-deal-is-a-template-2013-3 the mainstream media ran damage control. He was an amateur, or he was naive we were told. Next Mr. Dijsselbloem came right out and said he is in favour of wealth taxes http://www.zerohedge.com/news/2013-03-26/dijsselbloem-levy-wealth-defendable-principle. A fellow ‘thinker’ is Commerzbank chief economist Jörg Krämer who has suggested (Google translates) “a one-time property tax levy” for Italy and “a tax rate of 15 percent on financial assets.
There are many names for the EU system. Dirigiste is one, Statist is another. I just call it by its real name and it is Bolshevism.

@ #13 Mark on 03.29.13 at 8:43 pm
Canadian corporate profits have seen similar growth. However, the problem is, a giant amount of capital has been siphoned off to the housing market. The Canadian stock market has suffered substantial P/E multiple compression, and is dirt cheap after the past 6-7 years of stagnation.

At this point, the TSX is a far better buy. The Dow/S&P500 could only reach its new records by hammering interest rates down to 0%, and by draining all the froth out of the housing market. When the same happens in Canada, the TSX easily would be 20,000 or more as an index level.
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Where do you get this stuff from???
Canada’s interest rates are also near-zero.
Our stock market is dominated by banks (which are stalling as Canadians get maxed out on debt), and oil/resource companies (flat, as oil stays in the $90 range and lower). Even the materials companies are flat as China’s fake growth (led by debt-fueled infrastructure spending) slows down and demand for commodities slows with it.

Where is the TSX going to get growth from exactly?

Also – show me where the P/E of the TSX is 6-7… This seems way off to me.

The Japanese Yen dropped anywhere from 12 to 20% depending on where you start the chart over the last year. A dropping Yen will definitely help market values there but where’s the advantage to foreign investors getting hammered by currency exchanges? Just pointing it out.

I’d also like to point out as well that the TSX has been lazy but commodity laden small to mid cap Ventures has been hammered over the last 2 years running with no real relief in sight (I think the next half of this year we should see a good turnaround, can’t put much time into explaining it now). Ventures peaked around 2400 2 years ago. Its at 1100 today. Inventories has had a large part in this, 2400 was a bubble for the metalheads and they’ve had their shorts handed to them but it could turn around on a dime. International events could do it (North Korea as an example). Markets, especially commodities can change quite quickly so don’t overlook this fact, Garth.

Its true what you say about U.S. markets. You are spot on with U.S. market observations (not to mention the energy renaissance going on there) but… Canadian commodities could be the dark horse here looking at where Indexes are at and looking at what rogue states (looks like Canada has become one these days concerning the environment and climate change) can do can change the picture in a heartbeat. Don’t be surprised if metals come on strong in the latter half of the year this year. Q.E. is the U.S. playcard now and for some time to come. Enter war and well, y’know. And like I say, Japan because of its currency risks shouldn’t be a part of this conversation.

No, because Fed policy is stimulative. Rates will rise in due course. — Garth
Is it? Going on five years of record low rate with another 2-3 years to come. Still there is no talk of exit. When exit is talked about world market fall 20%. Printing a trillion yearly and getting maybe 3% total GDP. It can be argued that the US government makes up 50% of total spend. So really a trillion for 1.5% of the $13 Trillion economy. Factor inflation of at least 1.5 – 3.0 % and this investment is turning negative.

Please read past the headlines, Garth. The reason American jobs increased was the Obamacare rule requiring employers to provide medical benefits for employees working 30 hours or more per week. American employers therefore cut back existing employees to less than 30 hours per week and hired extra part-time employees to make up the difference.

The reason consumer spending is up in the USA is because retail gasoline sales are included in the indexes. Gas prices go up, ergo the indexes go up. Total retail store sales excluding retail fuel are declining due to increased payroll taxes. That is why dividend yields and income jumped in 2012-Q4 as companies and the top 10% raced to beat higher taxes.

Obamacare does not take effect until next year. US gas prices have dropped 20 cents a gallon. — Garth

In case you hadn’t heard, the Dow had gained 11.25% this year and 10.9% in the last twelve months. The S&P 500 is up 10% this year and almost 12% since last March. The NASDAQ has improved 8% in 2013 and 5% in a year. The laggard TSX is ahead 2.5% in the last 90 days, while the Nikkei in Japan has given investors 19.2% this year and 23% over the past year.

These numbers are spectacular
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Aggreed……. But weird I made most of my loot last six months shorting.

Ha….. I fund my Forex account with 50k Small percentage of net.

I play with no more than 9k at any moment so in a few weeks I’m up 33 percent on money at risk or 6 present on the loot in account.

“US markets are still trading about 10% below the long-term average when measured in current corporate profits. That suggests more to come. Lots more.”
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Totally agree. Dow 20,000 is on the way.

“Imagine the people who piled into the market in late 2008 and early 2009. Big gains were made.”

Except this describes almost nobody. People who believed in stocks were already heavily invested going into the 2008 crash (after all, the market wasn’t trading at a particularly high P/E ratio, and there were no signs that a crash was going to happen in Canada). And people who didn’t generally invest in stocks, mostly didn’t rush to cash their GICs and savings accounts in to buy stocks in the collapse.

As for your 424%, congratulations on your success, but that does not describe the average investor. It is not realistic to believe that an individual, unless they have a CFA, MBA, P.Eng., etc. can actually outperform the universe of fund managers or the broad market index. Most people, in fact, will underperform. Excess returns are often indicative of being exposed to excess risk of certain “tail” events, excessive sector concentration, or excessive leverage.

A tax of .5% percent is mooted to be levied on all wealth. For instance your grandmothers sterling silver tea service or heirloom jewelry. Under the proposal the tax authorities will have the right to enter premises without a search warrant any time of the night or day.

There is nothing unusual about such a tax. I first came across it when I worked in the state of Missouri. A tax inspector came to the house, looked in all the rooms, assessed my wife’s wedding ring, totaled it all up and we were taxed on that amount. Turned out it wasn’t much because the furniture came with the rental apt. Atthe time, I was shocked. The idea that we would have to pay tax on personal belongings that we owned, not just when we purchased them just seemed wrong. However, we all adjust.

“Where do you get this stuff from???
Canada’s interest rates are also near-zero.”

The BoC policy target is 1.00%. The Federal Reserve policy target is 0%, with large amounts of QE in the form of bond purchases. Its a substantially different environment. The US has piled on all of the stimulus measures possible, while the BoC has done little or nothing.

Our stock market is dominated by banks (which are stalling as Canadians get maxed out on debt),

Banks stalling? They keep reporting larger profits. Doesn’t seem like a stall to me. If anything their profits should grow as spreads rise due to decreasing credit-worthiness of Canadians, while funding costs remain low. Remember the 1990s?? The banks quadrupled with a RE crash happening in the GTA.

and oil/resource companies (flat, as oil stays in the $90 range and lower).

Very low P/E ratios and significant upside as the transportation issues are resolved.

Even the materials companies are flat as China’s fake growth (led by debt-fueled infrastructure spending) slows down and demand for commodities slows with it.

Not many infrastructure-leveraged materials companies in the TSX. And people aren’t going to stop using Uranium and Potash. The former of which is due to power up again (no pun intended).

Where is the TSX going to get growth from exactly?

Banks, materials, gold and oil. Lots of growth available.

Also – show me where the P/E of the TSX is 6-7… This seems way off to me.

I never claimed that. The P/E of the TSX is around 12-14 (depending on how you measure, trailing, forward, ‘present’) which is substantially below the historic average of around 17, and certainly below traditional recessionary levels in the 20-30s. The TSX is extremely cheap. Did you see the most recent dividend payment of XIU, the TSX tracking ETF?

6-7 referred to the number of years of stagnation since similar levels were reached back in 2007, with the peak in early 2008.

#22 daystar — “The Japanese Yen dropped anywhere from 12 to 20% depending on where you start the chart over the last year. A dropping Yen will definitely help market values there but where’s the advantage to foreign investors getting hammered by currency exchanges?”

That’s certainly true, but the glory of this universe is that you can often find a hedged fund. A quick google shows http://ycharts.com/companies/DXJ which has gone from 31 to 43 since November.

Just as an addendum to my previous post, you can think of the Dow/S&P as an athlete who has been pumped full of every steroid imaginable, and has only reached a certain peak of performance. While the TSX which hasn’t been pumped full of steroids and is basically shouldering a burden of capital flight (towards the housing market) is almost keeping up.

Once the investible funds of Canadians starts flowing back into the stock market, and once the Canadian market starts to get a shot of steroids, its my suggestion that it will take off with a vengeance after being relatively flat over the past 13 years.

Question is – what are the longer term prospects for growth? Not great I’m sorry to say. Traders are short sighted morons and market moves reflect that. The latest run-up is no more valid than the panic selling of 2008. The traders think they have it all figured out – but I suspect they will be proven wrong again very soon.

1) The chart. Yes, it was bad. Yes, it’s getting better. Are some of these jobs bad? Part time? Filled by overqualified individuals? Hell yeah, but an underemployed person still spends more than an unemployed person.

A bet on US stocks is not a bet that high paying American manufacturing jobs are coming back, or that labour will start to enjoy a greater share of recent productivity gains (quite the opposite, for some companies). Many American companies earn a lot from outside the US, so for these, it’s a bet on a global recovery. Many earn from the global middle class, which is growing rapidly. Many manufacture offshore.

“Question is – what are the longer term prospects for growth? Not great I’m sorry to say. ”

The US market tends to be highly leveraged to falling interest rates (which probably can’t fall any further), while the Canadian (TSX) tends to be levered to rising interest rates.

You can see this in the interval 1970-1980, where the TSX ended up at an index level double that of the Dow (ie: TSX = 2000, Dow = 1000) after starting from a relatively similar level a decade prior. Of course, the Dow was able to pull forward as the TSX lagged, but much of this was due to the long-term trend of declining resource and gold prices. I personally expect the gold stocks (and to a lesser extent, uranium, potash and oil) to contribute to the next phase of TSX outperformance versus the Dow as interest rates rise in the US and globally.

The market is overbought. The Schiller P/E for the S&P 500 stands at 23.5 today with the median being around 15. And the Schiller P/E is the one that correlates with long term performance. Have a look:

Ii seems the rush to the stock market is an attempt to avoid the inflation.

North American stocks are overpriced comparing P/E to the rest of the world. And the earnings are result of excessive monetary stimulus.

Inflation is understated and according to some there is no growth in real GDP, on the contrary there is contraction, the fictional ‘growth’ is in nominal numbers. If real inflation is factored we might have 20 % or more contracting from the top (2005, 2006?)

Of course I would make my profits on big international companies that happen to be based in US, their profit comes from abroad.

The real growth is in Asia and Latin America, Northern Europe. Exposure to these markets is paramount.

Our stock market ‘bubble’ is sustainable in long run only of our currency implodes.

“North American stocks are overpriced comparing P/E to the rest of the world. ”

I disagree. The P/E’s in Canada/USA may very well be higher because there’s more potential for growth here. After all, there’s barely 500 million people in Canada, USA, and Mexico combined. Which is less than is shoved into an area roughly the size of 3 California’s in India.

Places rich in resource wealth, on a relative basis, have always traded at valuation premiums to places with resource and land scarcity. As resource and land scarcity are fairly hard barriers to growth over the long term.

Garth, are the returns that you claim (that infamous 7%, in particular) prepared in accordance to GIPS Standards? If not, the way you present your performance lends itself to embellishment.

For instance, when you claim that “a balanced portfolio…” (with “a” being the key word) returns 15%, you are only referring to a single portfolio. Nonetheless, if you work for a wealth management firm managing hundreds of portfolios, you are bound to get at least “a” portfolio with these returns, even during market corrections. This is an outlier and not representative of the average performance of a basket of similar portfolios.

That’s why GIPS Standards recommend using portfolio composites for a minimum of 10 years. This is becoming industry standard.

#49 Mark on 03.29.13 at 10:22 pm
“Question is – what are the longer term prospects for growth? Not great I’m sorry to say. ”
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A large number of companies continue to pay dividends greater than 4%.

“Our stock market ‘bubble’ is sustainable in long run only of our currency implodes.”

The US market might be a little bit overvalued at this point, but business ownership has been proven, over hundreds of years, to be an incredible wealth creator. And let’s face it, banks aren’t paying any interest on cash ‘savings’. Gold and silver might not be a bad choice, but there’s risks there as well. I don’t see how you can just blindly label the stock market an unsustainable bubble, without looking at the markets relative to other asset classes. It is this sort of thinking that got us into a world of trouble with real estate, after all.

I don’t know Garth, I understand a lot of US corporations are making record profits, but I would challenge you to walk into any small city America and ask business owners if they are enjoying record profits. You would probably get laughed out of town. I personally have been going to Phoenix every year since 2007 and am amazed by the decline in the number of shoppers at the malls. My most recent trip (January) was the most amazing of all. One of the newest, fanciest outlet malls in suburbia had probably less than 100 people milling about. If that same mall had been in my home of Edmonton, you would have to book a week in advance just to get in the place. Restaurant areas that 4 or 5 years ago used to be packed every night are literally empty on weekends. It appears to me the reality on the ground is much different than that on CNBC. It is definitely getting worse down there every year. Went to New York and San Dieo last year as well and it didnt seem much better. Compared to Alberta the US that I have seen is currently a wasteland of economic activity.

Stock pumpers, real estate pumpers – ask any citizen how good it was in the early 1970’s when bank accounts paid out +/- 10% interest annually – as soon as people smarten up – the high interest accounts will have to come back – if the banks want customers – otherwise flight of capital out of Canadian banks to other other ones in countries where banks pay out far higher rates of interest, e.g. Australia, New Zealand etc.

[…] Lately it’s been flashing green, having regained all ground lost in 2008-9, and starting to make new highs. Some people, who make their kids wear helmets and use turn signals in parking lots, worry about this. But you shouldn’t. Continue reading → […]

Have you seen what happens to athletes who get off the juice? Invest-able funds? We have a deep ditch of personal debt in this country that stretches all the way to China. When I see a coin laying on the sidewalk I think it must have been a Chinese national making a wish.

As a retired US Boomer, who has the majority of his loot in the market, i have already taken 2 years worth of usual withdrawals this year, and the dam thing s ahead almost $56,000 Us AFTER taking out money.

Sure beats using a home as an ATM. (you have to pay that back). This loot I get to keep.

Don’t use shorts very often, but have in the past. Gold & silver would have been a good short, maybe there is still room there? Don’t see the need. RE trusts, good, funds good.

Will it correct? Absolutely! When? Don’t know. How far?
Don’t know, but the general direction for the foreseeable future is UP. Will that change? Yes. When? Don’t know?
How will e know? Read, figure the odds. When bankers start lending money to people with no means to fulfill their obligations run like hell! For now, not likely to go there.

In case you hadn’t heard, the Dow had gained 11.25% this year and 10.9% in the last twelve months.

Garth is correct. Build a diversified portfolio with a target mix suitable to you of Canadian, US, international stocks by style; throw in some emerging markets stocks and bonds. Whenever one asset class outperforms sell off the excess profits and rebalance into the asset class that underperformed bringing your portfolio back to your original target mix.

This US recovery looks identical to Canada’s circa 2009. By real estate, of real estate, for real estate. I wonder if the FHA, Fannie and Freddie have been inspired by the success of CMHC…..leverage up with govt guarantees and watch the Economic indicators fly. Obama/Bernanke have managed to reinflate both the stock market and real estate bubbles at the same time. Hey, at least they didn’t start any wars!

” Whenever one asset class outperforms sell off the excess profits and rebalance into the asset class that underperformed bringing your portfolio back to your original target mix.”

Exactly! So at this point, one should be selling off some of their US exposure, and chipping away at the TSX. And if the TSX does a massive outperformance versus the Dow as it did in the 1970s — sell the TSX and buy the Dow.

The same can even apply within the indicies. The banks are now 35% of the Canadian TSX60 index. Most of the large-cap gold miners have dropped by 30-50%. Maybe selling a little bit of RY, TD, and BNS (or just taking their dividends), and using the proceeds to pick up ABX, GG, KGC, and AEM would be a good idea.

Garth: who see the tectonic shift from real assets to financial ones, will be rewarded
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True for the real estate sector at the moment.
Financials without real economy do not fly.
Let’s not ignore peak oil, growing population, resource scarcity.
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Mark: 55, 61.
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Russia is resource rich, so is Brazil. So is Canada.
Not US and Mexico.

Let’s not generalize. US Market is overbought. P/E is high compared to fundamentals. Growth in US? You must be kidding. In which sector, financials and housing (lol)?
Asia and BRICS are growing, so is Turkey. This is where the growth is. US market is smoke and mirrors. Just stop the printing and watch.

Agreed! TFSA should be called Tax Free Investment Accounts. Before you invest in RRSP’s maximize your TFSA (TFIA) with growth stocks. Use the capital gains in the TFSA to make your RRSP contribution. Take the tax refund and invest back into the TFSA. Do not remove any of the original principle just use the profit to fund your RRSP.

#61 “Have you seen what happens to athletes who get off the juice? Invest-able funds? We have a deep ditch of personal debt in this country that stretches all the way to China. When I see a coin laying on the sidewalk I think it must have been a Chinese national making a wish.”

Personal debt = An asset in the hand of a creditor. When creditors stop lending money to people, they’ll lend money to investors and to corporations instead. Personal indebtedness is high, but corporate indebtedness is at almost all-time lows.

And of course the withdrawal of QE, and higher interest rates will be enormously painful to the US. Which is why I’m not personally convinced that tossing money into a S&P500 index fund is a good idea. The performance might look good in the short term, but most who buy equities, at least theoretically, are investing for the long term.

10 Shawn – I’ve never seen how they break this percentage down. When we think “consumption” we envision cars, tvs, food. But what about some health services? Ultimately, they are “consumed” like a haircut.
Ditto for education.

Now what about infrastructure? If I build a highway then certainly at least a portion of it is “consumed” by allowing transportation of goods, or providing a travel
route for those workers providing consumer services.

I am thinking some emergency services and probably military spending. I dont sit around asking myself “should I call the fire department today?” There can be billions in military spending creating products that are never used (thankfully)

Very well explained – the economic and financial situation in the US at the present time but wasted on deaf ears here in Canada. Shows how insignificant in the total picture Canada’s economy really is and how conservative its citizens are. Too bad but it will never change.

They can’t raise interest rates in the U.S. because the debt is to high.If we have hyper inflation,then they raise rates but the economy collapses.Trillions of dollars in debt with 4% or 5% in interest payments.Never ,we will have low rates for a very long time.The US market will keep going up until the stimulus stops. The goverment should pump the market with 150 or maybe 250 billion a month.

Periodically, Garth writes: “Why do I bother?”
I know why Garth. It is simple. You get to see the success stories, on-line and in person, and you know the positive results of your efforts in all the lives of people you have managed to reach. There is nothing better or more rewarding. For many of the closed minded and hard headed, there is always hope, as one never knows who, or when, they will get the moment of clarity and see the truth. Unfortunately, for many people this only occurs after a self administered beating to themselves causing severe pain in many, many different ways/losses.

For myself, being mortgaged, having kids, living payday to payday with no savings and no pension looks like a nightmare. Through a series of events, just life as it happens, I have been self supporting since 17. When you have shoveled the shit out of the barns at the racetrack for a $, your perception of making a living and wanting to learn everything in life you can about everything, quickly becomes a strong desire. i never had self pity through any of it, but holy man, do I ever have a lot of gratitude for how everything turned out. To people who borrow hundreds of thousands of $$$ for a shelter, and have no money, I simply have no understanding of that mind frame. To me, that looks like shoveling shit out of a barn.

I have been following your blog for some time, because it was amusing and different; providing a realistic perspective on the ecomony and so-called financial markets, which are mostly populated by hypocrites and dilettants. Recently, I have read your blog only sporadically. I was very disappointed by the newest edition because it encourages readers to go after virtual markets with just one objective: maximizing profits. Shame on you! I thought you had principles; but here you are betraying them.

In many of your messages and those by your followers (and, even more so, the aggressive and dismissive critics), there is a subtle undertone that people who do not pursue money markets with a sole objective of increasing profits are ingorants, dreamers, or idiots. You continue telling people that they should maximize their effort to generate wealth. Do you have an idea where wealth creation is coming from? What is the source fueling it? Do you have an idea what social and economic impacts it has? Who is benefitting? Who is suffering? Is there sustainable wealth creation? – anyone answering the last creationist-type question with a yes is probably in the same state of mind as those creationists who like to challenge Darwinism. Anyone with a perspective that goes a bit beyond personal economic affairs knows that there is no regenerative or sustainable source of wealth creation. With the current global infrastructure, in particular energy infrastructure, economic development has only one way to go… Serious governments will have serious scientific advisors who will tell them what the trend must be. Alas, they cannot speak out what they know because the truth is incompatible with mechanisms by which democracies operate.

What has been fuelling economic growth and wealth creation? The access to cheap and abundant energy (> 85% from fossil fuels). The scheme has been highly successful and some politicians believe that they could still transform the countries that they govern into energy superpowers using this scheme. It has been very successful in the past; sure governments have been accumulating debts; but look at the private wealth it has generated! During the period of about a decade in which the deficit in the US has grown to 15 Trillion of a meaningless unit, private wealth has increased by about 3-4 times of this amount.
Will it be successful in the future? Of course not. Energy infrastructures around the globe are under immense pressure. Sooner or later (maybe it has happened already) demand must outgrow supply of energy. Apart from grave concerns about environmental impact of energy production and use, including global warming, the consequences of this growing demand vs. supply gap will be fatal.

Who are the dreamers and hypocrites? Here’s the real deal (some fundamental physics paraphrased nicely to appeal to general audiences by C.P. Snow, an English physicist and novelist):
(1) You cannot win; meaning: you can’t get something for nothing because matter and energy are always conserved.
(2) You cannot break even; meaning: you cannot return to the same energy state because ENTROPY always increases (in the long term things are bound to go downhill).
(3) You cannot get out of the game; meaning: absolute zero of temperature is unattainable.

Interestingly, until about 2 generations prior to us, inhabitants of this planet were perfectly aware that they could only eat in winter and spring, what they had grown and harvested in the preceding summer and fall. What a loss!

Anyway, you always wrote that your blog is pathetic…
Families investing in the economy in which they live is worthy and correct. You are wrong to call them “hypocrites and dilettantes.” Nonetheless, your argument was worth following, until you included the final reference to this blog. You may feel moral and ethical, but you have much to learn about being human. — Garth

Interestingly, the Japanese Yen was predictable if one paid attention to the change of governent there. Japan had a couple bad GDP quarters last year and the higher Yen was blamed among other reasons (like tsunamis). Government policy with a change of government in November has been Q.E. full steam ahead combined with trade deficits from energy imports and its crashing their currency:

Interestingly, their government has vowed to keep external debt low which is good but their government is still running… what is it, close to 10% deficit spending right now? The question of energy imports should lessen if they go nuclear again and a lower currency should give government tax revenues a boost with higher exports but inflation has to be running uncomfortably high there. On one hand, it looks like tactical government policy to drive down the Yen and boost exports. On the other hand, does their government have any other alternative to Q.E.? When one finds the quick answer to that question, one quickly sees the dangers in investing in the NIKKEI (i.e. YEN) directly and for that matter, openly question the future of the YEN.

#52 Investx on 03.29.13 at 10:34 pm

Lower commodity prices could cause the loonie to fall (happening already), especially in energy and what will the Bank of Canada do to offset a falling loonie as it drives inflation? Thats right, higher interest rates but higher mortgage rates shouldn’t come from the BoC for at least 2 or 3 more quarterlies. No… for mortgages it’ll be higher risk creeping into the bond markets (once Genworth blows the 50 billion in guarantee’s the govy gave them) in a year or so that force rates to rise (and we are foolish to not ask why Genworth is so special, their parent corp isn’t from here).

Back to what could tumble commodities (or its exports) is the U.S. is going through an energy renaissance. Its possible that fracking coupled with horizontal drilling could cut Canada’s exports all on their own from shrinking demand south of the line and since the corrupt Conservative governments out west have never bothered to encourage a pipeline anywhere but south in 42 years, what is Canada going to get for its oil?

Canadians really should be asking themselves just why it is that close to half of our resources are owned by international energy corporations (mainly american) who enjoy the world’s lowest energy royalties. Harper comes in and what does he do? Destroys Income trusts (definitely a tax advantage for Can oil corps). Sure, Can energy corps are enjoying the world’s lowest royalties but what we don’t own, we are close to giving it away and its nearly half of our energy sector’s market share. Its not just dumb. Its corrupt.

Readers, its not by accident. Same goes for heavy crude we currently sell to the U.S. for .70 cents on the dollar. What, are Canadians too dumb to cut heavy crude with NGL’s and lighter crude to send it on its way with the API and purities the customer likes? THINK! Bitumen glut, its all just noise readers. Same goes with pipelines headed east. Trans Canada has a right of way headed east with an unused old natural gas line that they think can be used to send 200,000 BOE’s per day to eastern Canada. When will that take according to Alberta’s corrupt Redford? 5 years? Its noise. The east could soak up 1.2… 1.3 million BOE’s per day easily possibly more and paying brent crude prices since forever and what does the west do about it? U.S. first…. and cheap.

It was only 28% of the parties election campaign budget from a guy who stood to gain $107 million for a new Oiler Casino stadium complex with the corrupt Cons still in power. And the media during the election used this “overwelming surge in donations” to mean “growing public support” for Redford’s Conservatives! Its dirty.

Then there’s Ed Stelmach. Honest Ed. Yeah, he gets in and votes his MLA ministers a 38% raise within the first 3 months. They are all making almost as much as Harper with Ed on the scene.

Next, Ed talks about how he’s going to raise royalties. The tarsands royalty scheme at the time treated development as a mine very similar to large copper mines in Africa. The government was supposed to take in 25% of net profits as a royalty after capital expenditures were accounted for. So, just as a good deal of tar sands development was just becoming profitable what did Ed do? Change it all back to so many bucks a barrel, back to the world’s cheapest royalty rates.

And Alberta wonders why they are running deficits. Utterly corrupt governments. And lets not stop there! Here we’ve got the big oil lobbyist Harper who wasn’t just a lobbyist with Big oil when he served as president of Canada’s largest international lobby group, the National Citizen’s Coalition for 5 and a 1/2 years… (or the NRA) no, he also lobbied for international insurance corps like… AIG’s (US) parent spinoff (now Canada Guaranty) and Genworth!

So here we’ve got bloated CMHC mortgage debt to near $600 billion from $275 billion in just 7 short years and there’s talk of privatizing now almost daily since the Harperites have run it to the ground. So what has Harper done in 7 short years and should accomplish before he’s gone from office? Try handing over Canada’s entire mortgage industry to Americans outside of the now defunct Canada AIG (now Canada Guaranty, a small slice of today’s big picture).

My first instinct is to say… “my oh my, are Canadians dumb”. Few ever really take the time to vet their leaders before they vote. Sad. Its not entirely the fault of your average Canadian though. Why? Harper lobbied for Canadian media through the NCC as well! And hey, if you can promise the privatization of the CBC or the death by 1,000 cuts and shrivel CBC’s market share (24% 3 years ago), who benefits? And who does the rest of media support knowing they’ll grow with the lobbyist Harper in Control? And who did Bay street support with a mortgage industry that grew its mortgage portfolio risk free (CMHC took the risk) by 70% over 7 years (while incomes grew by less than 10%, bad macro economics, sheeple, er, ah, I mean people) with banker CEO’s justifying their tens of millions?

In two words… corruption and greed. And a special word for our PM, I think treason.

Much as I like to rant Garth, I have to stop myself! There’s too much going on in my life right now. Loving this Sabbatical, working out daily and feeling the best I’ve felt in years. A long time dark cloud has passed, getting in touch with the universe, tossing old worn out rituals that never worked for ones that do, opportunities I couldn’t have imagined a mere 3 months ago are coming to light and blowing my mind. I’m loving this Hiatus I’m on but I’ll come back from time to time to chat it up and stir the pot.

#72 Mark on 03.29.13 at 11:31 pm
” Whenever one asset class outperforms sell off the excess profits and rebalance into the asset class that underperformed bringing your portfolio back to your original target mix.”
——————————————————————–
I would argue this. I believe in letting the winners run. I use dividends to add to the dogs or laggards.

Actually your strategy courts volatility and heightened risk. That might suit your cowboy temperament, but most people are better off to constantly consolidate gains and invest in assets with future growth potential. — Garth

…nevertheless, they are the same… I still don’t see a reason that the TSX would outperform based on valuation.

Yes, the S&P has been on fire and is overdue for a short-term correction, but I still feel that Canadian Banks will be in a slow growth (or even no growth) phase for a long time – especially the ones with the highest exposure to the Canadian household like National Bank and CIBC. TD has more than half its earnings from the U.S., and Royal and Scotia are fairly well diversified.

Bank profits are at record levels, operating in exactly the environment you describe. What would dramatically alter their fortunes? — Garth

Since buying my place last year, I figure our house has appreciated just shy of 5%, according to my calculations. Sure it’s not the 11% some claim to have made this year, but I’m not one of those dinks who cares about bragging. I hope to have the place paid off in 7 years and then it’s when I’ll be making some serious cash. Combine that with a full head of hair and tight buns, I’ll be a Milf magnet of epic proportions.

Nope. Not enough impact to dramatically decrease profits overall. Canadian banks with US exposure are doing very well; capital markets operations are strong contributors to the bottom line; and existing mortgage portfolios continue to perform. Homeowners will suffer equity losses, but the banks will still see the debts serviced. I respectfully disagree. — Garth

@Mark, post #34:
Almost nobody piled money into equities in late 2008 and early 2009 you say? That’s strange, I was looking through my old investment statements and saw that during this period I was moving money OUT of money market funds and National Bank Altamira Cashperformer Fund and INTO equity funds. How could anyone not do so? Equities were on sale! Imagine that, Boxing Week fire sale blowout clear the inventory out NOW sales that lasted all through the fall and winter months! You don’t get such dirt cheap buying opportunities every day.

‘No, because Fed policy is stimulative. Rates will rise in due course’. — Garth

Garth, when in due course the Fed withdraws its stimulus and raises the Fed fund rate, can you explain please how the US government will pay the interest on its (now) $17 trillion of debt, then ,$XX trillion of debt?. With rates at ZIRP of course paying these interest charges isn’t a problem… just wondering.

Nope. Not enough impact to dramatically decrease profits overall. Canadian banks with US exposure are doing very well; capital markets operations are strong contributors to the bottom line; and existing mortgage portfolios continue to perform. Homeowners will suffer equity losses, but the banks will still see the debts serviced. I respectfully disagree. — Garth

To each his own… I still hold Canadian Banks – just not for growth purposes. I treat them (and BCE, Rogers, Enbridge, and many others that make up any Dividend-focused ETF in Canada) purely as a source of Dividend Income, not for the growth. I consider U.S. and Global Equities to be the place for growth in the future (current Cyprus “crisis” aside).

#98 Alga3 Fan on 03.30.13 at 10:29 am
#52 Smoking Man on 03.29.13 at 10:24 pm
…
“So predictable so easy… Dogs do not try this, it’s dangerous, scared money will get crushed playing this game.”

I can’t help but think it might just be luck – and it can turn in an instant. Anyhow, keep us posted how you do in the next few months because I’m rooting for you!
………………………………………………………

I will post weekly

It’s not luck, just a different way of looking at it. The schooled will talk about, RS MACD Support Resistance, Delta, Gama, bla bla bla.

I look at the mind of the counter party. His Greed his fear. The charts tell you that..In plane sight

On the way up guys that bought at the start of trend are in the money, they wont sell at the first dip, (greed) but once the second ear appears and is breached , and starts to drop (fear). The in the money guys take profit forcing a sell off.

And the reverce logic on the way down. works 65 % of the time.

I look at the daily chart to gage over all direction, and bet inter day 15 min chart, loser stoploses when going with the trend, tighter going against the trend.

Canadian Major Banks – There was a time that the City of Toronto managed the employee pension funds back in the 1980’s with an investment committee. One member came to my office one day to chat, and the major banks were selling for about $10.00 each. He told me that they invested all their equity capital in bank stocks recently with no diversification, and just laughed. Look at the growth in those bank stocks over the years with capital appreciation and dividend growth.

#101 HeartoftheWorld — “Garth, when in due course the Fed withdraws its stimulus and raises the Fed fund rate, can you explain please how the US government will pay the interest on its (now) $17 trillion of debt”

Well, when the Fed withdraws its stimulus, that means selling all those bonds its been buying, right? That’s three trillion, more or less, of cash in the door. Unemployment will be lower, so tax revenues will be higher. And I shouldn’t have to point out that the interest that the US government has promised to pay on an existing 30 year T Bond is in no way affected by current or future interest rates. Spending cuts and tax increases are a possibility. And since the government will likely still be running a deficit, it isn’t like it needs to come up with cash for the entire nut; it can just keep borrowing.

Have you looked at a term structure and balance sheet of NET federal debt (i.e. not just held by another government agency, meaning the government owes itself money) along with a pro-forma cash flow statement and concluded that debt service is impossible? Because that’s an analysis I can look at. But if it’s just a repetition of stuff from the gold, lead and canned tuna and beans crowd…

I would be cautious on buying anything right now. It’s the time of year when all the money managers and investors have pumped in their RRSP and 401K plan money and when the market traditionally tapers off and profit takers step in.

With North Korea making threats and other hotbed areas on edge with Euro probs in Italy rearing up there’s no reason to leap in thinking you’re going to miss the boat. Chill out, watch the charts and see what transpires over the next couple of months. It’s a dicey time out there.

As per Victoria, I just watched on the news how downtown in dying with more empty shops than usual due to the big box inflow sucking the limited consumer cash in a town with mainly mid level paying jobs at best. Overpriced real estate is killing the heart of this town and something has to give.

If you think every time I reference the markets I am telling people to ‘leap in,’ you have much to learn. This is a report on why markets have done what they’ve done. If you’ve had no exposure, it’s a simple consequence of your actions. — Garth

Garth..please allow me to make one more point….you say this…I disagree…and I’ll tell you why you’re missing the point.

“But the point of this Easter bunny post is to explain why stock markets are doing what they’re doing. It’s not just speculation, government money-printing, greed, manipulation or high-frequency trading feeding this advance (as all the doomers we keep in this blog’s basement believe). In a word, it’s growth. In another, recovery. Markets will surely correct after one of the best starts to any year on record, but it will likely be temporary. In fact, US markets are still trading about 10% below the long-term average when measured in current corporate profits. That suggests more to come. Lots more.”

The fact is that the ‘recovery’ you suggest is negative on jobs and absent on the small business front but profitable in another much larger and unseen area. It’s a classic tale of two economies.

The entire argument sits on the fundamental element of supply and demand…..now you might say ‘eureka..thats recovery’….actually no..it isn’t.

The corporate world has shunk to the point where there is a lack of everything….and especially a lack of new supply….there are no new plants being put into operation…the ones that exist are being scaled back..with added job losses as we’ve witnessed.

The market is rising on the smart money sniffing profits….because companies are hoarding cash….heres the catch phrase…..”Don’t build and they will come”.

Companies like Marriot and Black Rock among dozens of other entities have taken millions of distressed real estate off the market in rental units….creating an artificial supply deficit…..people that will buy…as they did even during the great depression have little choice….builders are squeezed for financing and can’t build..ergo price squeeze…recovery? hardly.

Look deep and find the reasons that unemployment is still going up and not down……thius is no recovery…at least not for a couple of years out. Remember..the stock market does not reflect mainstreet….it is a forecasting mechanism that looks over the valley 18 to 24 months out.

Typically thats when average investors will jump in and get douched……at the top of the cycle when the distribution phase kicks in and smart money takes their money off the table…….coincidentally thats when the fed says they’ll be clawing back QE…….so pick individual stocks now..this is no time to be a long term …or balanced investor.
Thanks for the lesson. Now work on your reading skills. I said the markets are leading indicators, and those who followed my urging two years ago to invest in the American future have profited well. This is still recovery. You have to be blinded by ideology not to see it. — Garth

Garth agree with your analysis about real estate in Canada, but I totally disagree with your american recovery predictions when I see the amount of IT jobs that are getting outsourced to India. US needs to create more debt to sustain this recovery, and I don’t think it is going to end well

Garth I am very furious and disgusted with you after yesterday. I made some very legitimate and sound cases for gold and Mr Sinclair, and you didn’t post them.
“Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.” – BS
You are a communist.

PS – But otherwise thanks for your real estate info provided to us as a public service.

Not a gold blog. You’re just allowed in here for comic relief. — Garth

“Imagine the people who piled into the market in late 2008 and early 2009. Big gains were made.”

Correct. Those were the people in the know and who understood how QE worked. That big V recovery beginning in 2009 was a result of the bail out packages and initiated QE by the Federal Reserve. This QE is now up to 85 billion/month and is sustaining the momentum of the financial markets, and this will ante up soon to over 100 billion to keep the “steriod” affect going.
Back in 2008 what almost caused total annihilation of the financial system was OTC derivatives, the amount at the time was not even know, today it stands at 700 trillion as an official number, but its more like over a quadrillion (if your mind can fathom that), they just have ways to make it sound “reasonable”
Anywho, the Fed monthly toxic asset purchases will continue to infinity or until a new system is reset and introduced.
The DOW will no doubt set sail for 20,000+ on this type of monetery strategy, remember Zimbabwe unemployement is 80% with massive inflation, but they’ve had one of the best performing stock markets in the world. Sound familiar? The American Weimer Republic is heading towards the same course.
Thank You.

Because at last cuts such as the “bedroom tax” and universal tax credit come in, so we’ll finally get some money back off the richest people in this country – the poor. Any glance at our society makes it obvious who’s run up all the debts; the poor, that’s who, swanning around in charity shop cardigans and galavanting on shopping expeditions like the women in Sex and the City, squealing “Hey let’s go to Poundland and buy a dishcloth”, in ways the rich can barely dream of.”

Quick!! Blame it on evil Russians to justify this and prevent bank runs……ya its the Russians damn them…

Now the City of Toronto like other major cities went through a transition period, whereby, Omers became an option to stay or opt out in regards to pensions. Those who stayed with the old pension plan it still amounted to huge money with hundreds of millions in capital funds. Today it appears that Omers has it all, and look at their financial statements for a train wreck, and they are hopeful that in 15 years things might turn around LOL.

Crocodile tears for King Ralph is all you shed for him you duplicitious commie bi}#h. Stop betraying Albertans with your out of control spending. Alberta does not have an income problem. 50% of all job growth for all of CANADA came from Alberta. We have an out of control spending problem. You make me so damn sick. At least Raj Sherman has balls to tell people the truth about Dr. Intimidation(and I am no fan of Alberta liberals but I would vote for them to get rid of you).

King Ralph may have did a few things that were unpopular,but he never lied. He DID what he promised he would do and he got Alberta in the black when oil was 16-21/bbl. You can’t do it when it is 90? Did you not know? We Albertans like to at least get greased before we get fu$&ed.

#111 afraidit allmightend on 03.30.13 at 11:44 am
“Typically thats when average investors will jump in and get douched……at the top of the cycle when the distribution phase kicks in and smart money takes their money off the table…….coincidentally thats when the fed says they’ll be clawing back QE…….so pick individual stocks now..this is no time to be a long term …or balanced investor.”
——————————————————————–
Have you looked at Warren Buffet’s latest adjustments to his portfolio?

You should stop reading useless propaganda and make some wise decisions.

Now have no idea what happened, but the old pension funds with the city governments that were under administration by an investment committee. They had two people for advice; one was in house and the other was an external expert hired like Mr. Turner, and the two worked together, and they were glad to pay a fee for an external expert, as a balance.

I know as did commercial mortgage syndications with all the pension funds. Now in the old pension plan the surplus per employee was so high that could give each person on a pension a bonus of say $300,000 as an xmas gift, and there would still be too much money in reserve, so suspect all eventually was rolled over to Omers.

So essentially, you’re saying we have a surplus of greed-head investors who indiscriminately squander our shared, finite global resources in the relentless pursuit of personal profit and that many of those scoundrels come to comment on this very blog. In addition, you summon up a tired paraphrasing of the three thermodynamic laws to drive home the point.

I have a different take. We don’t live on ‘Spaceship’ Earth. Actually, we inhabit ‘Relatively-Hostile-to-Life’ Earth. It is a testament to all biological structures that they have been able to grab hold and hang on with such tenacity.

Personally, I’m proud of those DNA molecules that managed to blueprint successful life-forms even though most of its output is fleeting within geological time (giant lizards being an especially long-lived exception). I do this because DNA is only a molecule and can’t be proud on its own behalf. Incidentally, the concept of pride is a wholly unexpected by-product of DNA’s own handiwork.

The laws of thermodynamic are true and inescapable. No argument there. But they apply only to closed systems. The universe as we know it is a closed system. But the earth itself can be safely considered a ‘locally open’ system. It functions within a much larger system with our sun at the center. The sun indeed ‘winds down’ but it’s got a few billion productive years ahead.

Entropy, the march toward complete randomness, is certainly occurring. It’s final, inescapable state is depressingly well known. But life on Earth actually reverses entropy (locally, of course) by ‘winding-up’ under the sustenance of very a much larger system as it winds down.

That’s the true backdrop of life in my humble estimation. The thin skin around this planet is only barely capable of supporting life and grudgingly tolerates its presence. Every now and then it serves up a colossal geologic event or intercepts a piece of space rock thus setting ‘biological progress’ back a few eons. It is ceaseless human ingenuity that makes life on Earth tolerable for self-aware beings.

I know that Kevin O’Leary is simply a very rich comedian, but when he says “we are only bugs here in the overall scheme of things”, I tend to agree (except that there is no “scheme of things”). We need to get used to the idea.

Lest you think this is the ranting of a disgruntled, bitter old fellow, I assure you I’m quite content and self-satisfied these days. I got over all that miserable, idealistic, self-loathing stuff when I was a younger man.

I will now make an interpretation about this new picture, as this young girl has a disabilty, but has courage to face the mirror to become a ballerina, and is watching her moves, as it makes her happy in life, to see she can do all to duplicate them all in real time, just like anyone else.

I disagree as well. Credit doesn’t go away because its growth slows. And without credit growth, people won’t be able to easily refinance existing credit. This means that the risk of the credit will increase, and banks will collect larger risk premia. Obviously quite good for business.

Is it going anywhere, personally I am doubtful. There is a lot of stupid posturing going on. But what I find significant about the situation is it very inconvenient for the US as to its stated political goals in the middle east. For the last couple years the US government has been preparing the public for a some sort of a end game with Iran. Be it a political solution or military strikes/war.

I hope the following is a neutral summation of US policy towards Iran and bomb. The the following are US government statements and rationale to curb Iran from getting the bomb. 1)Iran is a threat to US homeland A) There is speculation that Iran will use its terrorists surrogates to smuggle in a bomb into the US and destroy a major city. 2)Iran is a threat to US allies in Europe- A)Even with its limited ballistic missile capacity nuclear missiles from Iran can reach Europe. 3)Iran is a threat to Israel A)Iran has publicly stated its mission is to destroy the state of Israel. B)Arguments like you can add 1+2 together and get Iran will destroy the state of Israel with a nuclear strike. C)Since Israel is small state with limited farming,water, and liveable areas even a limited nuclear strike on Israel can effectively destroy the country. D)Iran is not a rational state player so politics of deterrence do not apply.

There many other fine arguments for and against Iran. But I limited myself to the big memes that the US government is putting out to the world. I purposely
decided to not counter the US rationales because it not my goal in this post to say if these arguments are rational or not. But to say that with ever retching up of tensions in the Korea’s the Iran project becomes little more difficult to achieve.

Currently a lot political energy has been spent to built up Iran as a threat world peace and development. Unfortunately with North Korea on weekly basis talking about nuclear strikes(it should be said currently their ballistic technology can not reach the mainland US) on US cities and general attacks on US worldwide targets. The general US public may demand more action to counter NK’s threats real or not. I am not saying its a either or situation that US can not cope with Iran and North Korea at the same.But with every passing day and tensions high more political will have to be spent of the Korea situation that could have been spent on the Iran situation.

smoking man, sounds like your real estate business came to a screeching halt, now you’re back to your investment service and lil Alga here is your next pupil on the art of losing money, hope another ylo, rimm and rest of your big losers don’t make it into lil Alga’s portfolio.

If you think every time I reference the markets I am telling people to ‘leap in,’ you have much to learn. This is a report on why markets have done what they’ve done. If you’ve had no exposure, it’s a simple consequence of your actions. — Garth

I was just posting a cautionary opinion. It’s pretty easy for those will lesser market knowledge to not see it as a “report” and may feel inclined to get in now while the charts on the US are topping and the MSM keeps pumping it’s heart out.

I’ve had lots of exposure and did OK, thanks but wouldn’t put any new money to work over the next few months or so.

Personally I don’t see the US stock market truly reflective of the economy and housing dead cat bounce, but again that’s just an opinion, not a report.

#126 – Kevin O’Leary is an asshole and met him one day, as he forgets his roots when we all were not in the money, and he was blowing smoke, and took him down at the knees, and looked him in the eyes, and said go to hell you sob, and he said what?

#136 coastal on 03.30.13 at 3:16 pm
“It’s pretty easy for those will lesser market knowledge to not see it as a “report” and may feel inclined to get in now while the charts on the US are topping”.
——————————————————————-
Thank you for the entertainment.

Just to be clear. So, this chart tells you when to get in and get out of the markets?

People like Real Deal post bitter comments because they miss the point just as they delude themselves into thinking that they walk the moral high road.

Real Deal, despite your reductionistic thermodynamic rationale, be open to the possibility that, as a result of ambition / ingenuity / innovation coupled with principled / ethical / regulated conduct, sustainable economic progress and improvement in human quality of life may actually continue to manifest.

My optimistic perspective is mainly borne out of an experience providing medical care in Malawi, where the HIV+ rate exceeds 30% in many areas. People died horrible deaths and there was nothing much that we could do about it. Despite that the people I met there managed to celebrate life despite their hardship and struggle, all of them would have traded places with me in a nanosecond. I came home feeling guilty that our corner grocery stores are actually food Disneylands. I realized eventually that, instead of feeling guilty and pessimistic, I should feel fortunate, humble and optimistic.

I am firm believer that human resilience and spirit is the result of our drive for meaning. What a gift to live in a society that permits us to explore and define this meaning for ourselves. To participate in, and feel good about economic growth for the betterment of ourselves, our families and our communities forms a core aspect of this meaning for many of us.

Hard to look at that picture without wincing. But the more I do look, the more layers I see.
Here’s one … Double image: the little girl sees herself as a dancer, but the mirrors (world) reflect back to her that she’s not. Is her imagination strong enough to overcome her very real physical disability? No. But is her imagination strong enough to continue the fantasy that she can be one? I think yes.
Troubling … the difference between reality and the fantasies we all use to keep ourselves going. No wonder no one is commenting on it.

The FED is creating money out of nothing and is buying 85 billion a month in TBTF bank “assets”. The money has to go somewhere and it’s going into the stock market for the most part. A complete Ponzi scheme bubble. It’s all going to end badly.

I had two bills to pay at my bank today, and today is March 30th, but both were stamped April 1st, so on my pass book the money was gone, so where did it go? Did the banks take these funds to hoop interest on the money market over the weekend? My funds were gone on March 30th for a payment to be posted on April 1st, just asking.

Wrong, This is called BUBBLE! Even with overwhelming evidence Cyprus, Euro bailouts etc. You fail to see the obvious, the system in its current form will melt down. Oh well don’t work your assets will be the first to be taken.

#147 Kris – you are so wrong, as this pic is about hope and promise with a young woman who sets all aside to dance in the mirror which gives her joy to be just like anyone else to dance as a ballerina. The pic is very deep and touching.

“Those who understand this, who are careful to have balance and diversity, who see the tectonic shift from real assets to financial ones, will be rewarded.” All the more reason to get a good financial advisor.

Today’s pic: A girl in a wheelchair doing ballet hand movements – Is it supposed to be a metaphor for RE thumpers, i.e., people having unrealistic expectations?Using a disabled kid to make your point is in poor taste, Garth..

Very poor taste, indeed.

I chose a photo of hope and promise. If you see ‘disabled’, then you lose. — Garth

………

Being disabled is a state of mind.. I know a zillion healthy people who are truly disabled….

The FED is creating money out of nothing and is buying 85 billion a month in TBTF bank “assets”. The money has to go somewhere and it’s going into the stock market for the most part. A complete Ponzi scheme bubble. It’s all going to end badly.

Treasury issues bonds. Banks buy bonds. Fed prints money from thin air and buys bonds from banks (mostly). Banks get cash or reserves with Fed. The hope is the Banks will lend out the cash. Fed is paying 0.25% on cash reserves with Fed so banks often just collect that.

None of this involves any stock purchases. No money goes into stock market.

No money goes into bond market in this process unless the banks buy new bonds from the Fed which they may do.

This process does drive bond prices up and interest rates down. That makes stocks more attractive and can cause investors to bid stock prices up.

“Almost nobody piled money into equities in late 2008 and early 2009 you say? That’s strange, I was looking through my old investment statements and saw that during this period I was moving money OUT of money market funds and National Bank Altamira Cashperformer Fund and INTO equity funds. How could anyone not do so? Equities were on sale! Imagine that, Boxing Week fire sale blowout clear the inventory out NOW sales that lasted all through the fall and winter months! You don’t get such dirt cheap buying opportunities every day.”

You were, obviously, quite an exception. Volume at the low prices was very low, and mostly people who were forced to sell because of margin calls. In hindsight, of course, it was great value, but very few people actually took advantage of such. Then, as today, they were scared witless that the world was going to end.

#132 Smoking Man – well you just had to blow the KFC secret to good chicken, but am on a diet now. I had a decision to make with my wallet filled with green to buy a special at M&M for $5.00 off to buy 3 lbs. of pure chicken breasts at $14.99; not such a bargain, but did it anyway, so am glad do not have a wife who would say no, as the price is still too high.

This weblog has hashed and re-hashed the Three Pillars, of: Bikes, Babes, and Balanced Portfolios.

Today instead people are hooked on the tired canards of paying off mortgages, GICs, and sock drawer silver collections.

Lately I’m a believer in Financial Darwinism and I even told this outright to the higher-ups at work in response to some middling performances from increasingly shiftless co -workers. I don’t care that you have a mortgage, expensive trips, BMWs, LOCs and HELOCs. You don’t deserve squat unless you earn it.
Survival of the Richest. No excuses.

Deficit spending is quite different than quantitative easing (the $85 billion bond buying).

Deficit spending requires bond issuance. Government spending stimulates economy. Presumably much of the bond buyers would not otherwise have spent the money.

Treasury issuing new bonds to cover deficits DOES cause new money to go INTO bonds. (Only new issuance ever causes money to go into markets, trading existing bonds and stocks never involves net money going into stocks or bonds).

Well, I work in the automotive sector, specifically in the assembly line design and manufacturing side. We have doubled our sales in the last two years. The entire industry is booming big time and is forecasted to grow even more until 2015. The problem is all these machines, and manufacturing job, are all going to the U.S. and Mexico. None to Canada.
So all these people saying that job growth in the US is all service sector and is unsustainable don’t see what is coming down the pipe. Last year I rebalanced much of my investments out of Canadian funds and transferred into a u.s. funds account. For a while I had my doubts about that strategy, but it has been panning out well so far.
But then my luck hasn’t always been the best. I invested into a Japanese index fund three weeks before the tsunami hit.

RE: #116 Contrarian on 03.30.13 at 12:13 pm
Garth I am very furious and disgusted with you after yesterday. I made some very legitimate and sound cases for gold and Mr Sinclair, and you didn’t post them.

Here’s my take on gold:
Buy the HGD ETF ’cause gold is in a bubble. It’s going to be a nasty crash goldbugs, a nasty crash. ;-)

“I chose a photo of hope and promise. If you see ‘disabled’, then you lose. — Garth”

Dude – you don’t need to see “Hope and Promise” – you just need to see a girl ballerina.
Seeing “Hope and Promise” implies the person has something to overcome. In this case – she doesn’t – she’s a girl ballerina in a wheelchair .That’s all!

Garth, unusually high # of insulting/idiotic comments directed at you today, especially the one about the photo
of the little girl, a very touching and uplifting photo as I have ever seen. I am glad to see that you and a few of the dogs addressed that comment, and with such tact and class. Really really glad, because I am not yet that tactful, but you guys/gals are teaching me a lot. Thanks.

#89 The American on 03.30.13 at 7:02 am
At #3: GG, sorry, but you’re wrong.
At #6: GG, wrong again.
At #9: GG, yep, wrong…you must be getting tired.
At #18: GG, you’re just wrong again.
At #24: GG, you guess it… Wrong again. Anything can be argued. Did you know that? :
———————————-2————————–
Sure America – one of the sheeple. Need some more pablum?

The bull market in stocks is a result of the Federal Reserve’s asset buying program which is pumping money into financial markets, not underlying economic strength.

And he also noted that in 20% of recessions, stocks continued to climb. So while it’s rare for the market and economy to show this big of a disconnect, it’s not unprecedented. The Dow is up 12% since Achuthan first said that the U.S. was in a recession on July 10.

“The stock market went up 30% during 1926-27 recession,” he said. “It made this market look like it’s underperforming. We’ve seen this movie before.”

Achuthan points to a variety of arcane economic indicators that he says proves the economy is in a relatively mild downturn, despite continued job growth, a housing recovery and an increase in the nation’s gross domestic product. He expects the job and GDP figures to eventually be revised downward to show the economy was contracting, not growing, in the second half of last year and early this year.

He said the current economic weakness has little to do with the worries about the fiscal cliff, budget cuts and other Washington budget debates that have gotten most of the attention from other economists.

Achuthan added that you don’t necessarily need a shock to start a recession. It’s more complicated than that. He also says this downturn appears to be fairly modest and may be over before many people recognize that it even took place. Not even he’s predicting anywhere near the level of economic damage caused by the last downturn.

#231 John on 03.30.13 at 8:28 pm
“5: I listen to Faber and Rogers – diversify.”
——————————————————————–
Good lord.
If you want to make some money, perhaps you should try listening to Warren Buffett instead.

@Mark, post #159 who said: Then, as today, they were scared witless that the world was going to end.
________________________________________
That’s always a risk at anytime. How do you know some nutcase isn’t about to start another war, or another natural disaster is about to happen? In fact, leap years are the worst years because there’s one extra day for something to go wrong. As for being scared about financial problems as was the case in 2008-09, that’s just the kind of environment that creates the BEST buying opportunities, in other words when there’s blood in the streets and some of that blood is your own. History has proven that many times in the past, and will do so again in the future. I don’t know why more people don’t understand that idea.

Because they are all internal jobs!!!!! Real wealth is created through exporting outside the country. So money has to be borrowed to keep this thing going. WOW! I thought you would have lease know this. Wow.

the girl in the picture has obviously (coming from a dancing mom) had an injury and is practicing some of her routine while her leg/foot/ankle heals, common practice in ballet to use a chair while resting your ailing lower body.

So, when is the balancing in home prices happening? i live in the GTA and every month prices for homes are going up by the day while the homes are getting older and require a lot of updates and renovations. Giving up hope of finding something decent to live in let alone pay for it.

2.1 million jobs, of which xx% are non-existing from seasonal adjustments (like HPI), while many more are low wage part time jobs putting more workers in BLS's underemployed category. The quality of jobs is just as important as number of workers.

Did you know the BLS and StatsCan counts an unpaid family worker as a job?

(a) Did any work at all at a job or business, that is, paid work in the context of an employer-employee relationship, or self-employment. This also includes persons who did unpaid family work, which is defined as unpaid work contributing directly to the operation of a farm, business or professional practice owned and operated by a related member of the same household.

In other words, if you run a home business and your teenage son or daughter takes out the garbage for you — that's a job!

The State of California turned their unclaimed property program into a $5.1 billion slush fund. Over the years, and through multiple budget crises, California reduced the holding period for unclaimed property from 15 years down to three. Desperate to pay for their political largesse, Californian legislators even pushed to reduce the holding time for rightful owners to claim their property down to only 1 year.

They stopped sending notices to the rightful owners too. In an internal memo obtained by ABC News, the lawyer for California’s Bureau of Unclaimed Property objected to efforts to find the owners because “It could well result in additional claims of monies that would otherwise flow into the general fund.”

Yes, you’ve got it right. While most states keep unclaimed property in a special trust fund, California puts the money into the general fund to spend as fast as they can.
==================

Read the stories by clicking on link

As in Canada, unclaimed financial assets eventually become public property. Where is the news? — Garth

Interesting reading! Lots of folks valiantly trying to tell the markets what to do and what they should be doing; a great recipe for failure IMHO.
Markets making higher highs & higher lows are by definition in an uptrend and are “innocent until proven guilty” by a lower high and lower low.
(The opposite is true of downtrends, which are “guilty until proven innocent”)
As had been often stated here before, “price is the only thing that pays”.
Save your breath and listen to what the markets are telling you! And then act accordingly.

Been scanning MLS for fun and also for new rental digs lately,(for a change of pace), and honestly there is nothing but crap for sale and rent in Victoria without paying an arm and a leg. I really look forward to the blood letting in this city, the gouging and high expectations are gutting the core of the youth and young families. Seniors can’t be moving here anymore with this garbage for sale.

Can you find a reasonable condo for rent under $1500 that isn’t a closet ? Or how about buying a simple townhouse under$450K that isn’t on the edge of, (or in), some ghetto neighborhood ?

You are looking at $500K minimum to get into anything resembling an average neighborhood and the makeovers look cheap or still need them for another $50 to $100K worth. With ferry prices going up again and other inflation factors showing up all over, something has to give very soon for both sellers and slumlords. It’s called reality.

Quite funny Garth believes the propaganda news that the media spouts out..Gullible as gullible can be. He doesn’t understand that the Fed is buying up 50% of the stocks with fake fiat. This is the largest disinformation site on the net for the sheep to digest heartily..
The US government is buying half of all stocks with fake money. Would that be from its HQ in Area 51, or the 9/11 secretariat? — Garth

The US government is buying half of all stocks with fake money. Would that be from its HQ in Area 51, or the 9/11 secretariat? — Garth

Since when is the Fed part of US government? Apart from “nominating” the Fed Chairman, the US government has nothing to do with it. Otherwise, it wouldn’t have to pay interest on the money that the Fed “creates”.
I am thinking you know all this, but you don’t want to acknowledge it publicly, in order not to piss off some truly colossal powers, and governments they aren’t…
This was a message just to you. Feel free to delete, or not.

The Fed is the US central bank. It most definitely is under the direct influence of Congress and the White House, and is a key instrument of national economic policy. No amount of tin foil private-bank protestations will change that. — Garth

Reading Coastal’s posts reminds me of Victoria’s greatest ailment: Centre-of-the-Universe-itis.
Our family has been roosting on a small southern portion of this, the largest chunk of granite in the eastern Pacific Ocean.

Throughout this Capital of Tilley Hats and effete “British” behaviours, shortsighted-snobbishness has never winced, even once. Why should it? We’re all right!

EXCEPT FOR THE BAILINGS SERFS

You can’t eat the scenery which is why the younger low-paid and undereducated crowd is STILL leaving town.

“What do you mean, no more snivelling serfs to serve me my sidewalk lattee?” will soon be the complaint.

That day could come unless the server is an oldster needing work to pay his/her horrendous property taxes! Then, there’ll be even more class stratum.

Victoria is beyond lovely. But it is SOME people (the mainly influential who’ve made their pile in real estate and associated travails) that has set the psychic tone for this place.

TOO BAD

Yes, downtown Victoria was all the rage between 1945 and 1963 after which Town and Country and Hillside Shopping Centres started the erosion process.

Now it’s the fully architectually-bastardized Uptown centre in neighbouring Saanich, which will be the death-knell for lower Fort, Yates and Johnson Streets, for starters.

Sure a few new businesses have hatched on Fort Street, recently, but the overweaning feeling is that downtown’s best days are behind it, until something comes along to change all that.

So, snobbish, elitism in such a small city serves no interest. This awkwardness has its roots in the city’s early British colonial history (tug to the forelock and all that).

THE FUTURE OF OUR FAIR TOWN?

Outrageous and very long-range property tax increases and, of course, a new NDP government (apparently to be elected on May 14) whose predecessors just about killed this rat’s nest of socialist utopianism back in the 1990s, are what.

I count today you have some ten posts, closer to twenty if you count your alter egos here.

Why so desperate for recognition and stimulation here?

We care about you. Really. So in the brotherly spirit of this weekend, here are the things you say and what we hear, to help in your journey towards enlightenment:

You speak, in muffled spasms like a teenager under a blanket with mom coming up the stairs, of “forex”. Is it ‘x’ only because it cannot be ‘play’ for you, smoking man?

You say “early ins on an up draft will unload on the second batman ear. The early ins on a sell will exit on the right camel toe.” It doesn’t take a Dr. Wayne to know this sad code for an even more pathetic juvenile lack of control in your youth, to be followed by complete amorous inability in middle age. Your girlfriend (maybe cousin?) must have been very disappointed with you.

Speaking of doctors, you are dismissive of doctors and schooling in general, because neither has been able to diagnose the causes of your own inadequacies. The truth is that science has not yet progressed enough to appreciate someone like you who can be so completely half-assed in so many pedestrian, but momentarily curious ways; for you are a great montage of multiple mediocrities, written in Crayola, upon a Depends.

You speak of the “machine” and the “matrix”. This is a melancholy metaphor for you, we can see, for your machine does not work smoking man ….. we understand. The Matrix has in fact conquered you, it envelops you, because though you claim to seek the truth, you long ago got your red pills and blue pills confused. You only take the blue ones now. Just this weekend, you pathetically proclaimed “I am frist!!!!!.”

Were you trying to spell “Pfizer”?

You speak to the Honourable Tom Vu and say “chirp away little men”. We know you only wish that your little man could chirp, too.

You reveal much in your onanistic mini essays here, which we see more clearly now as merely the vestigial expressions of horizontal desires. We are sad, with you, not against you.

For you are trapped between two worlds, we now can appreciate fully. Intellectually, you are that awkward 13 year old boy in the back row of our grade 5 class (you repeated three times, alas), filled with nostrums and nonsense from both of the books you have read, ready to one day read Atlas Shrugged, which will be your third and last book (per usual for her fans).

You are still that sadly juvenile pre-adolescent, but now we understand better that you are also trapped in the physical apparatus of a 95 year old with low blood (and sphincter) pressure.

It all makes sense now.

Help is on the way!

Like you say, the internet gives you all the knowledge you can ever need, and this site may finally give you vicariously what you so tediously seek from your multiple postings on this blog.

#202 Victoria Tea Party
I counted 20 vacant shops in downtown victoria a couple weeks ago. Walmart and UPtown shopping centre might be taking alot of $ away. Downtown is really hurting. Maybe council will to give way to free parking to draw people back.

Because they are all internal jobs!!!!! Real wealth is created through exporting outside the country.

Basic BS more like. Every job on planet Earth is an internal job until we start exporting to Mars. Does that mean that you think that there is no real wealth on this planet until then? If you do WOW!! is a bit of an understatement.

#189 GG Every job on planet Earth is an internal job until we start exporting to Mars.

So it really makes no difference if india and china has job growth via exports compared to the US or Canada. So Canada and the US becomes rich if more and more manufactoring and exports jobs dont exist. Great i love your way of thinking.

Back in the early 90’s you had to know someone or bid on a lease to get into the so called “hot area” Lo Jo which was still a shady part of town with dumpy store fronts. Now that it’s one of the trendy areas they have maxed out the rents/leases and one by one they are crumbling.

You can’t keep gouging the shop owners when the consumer is going elsewhere because you have to charge so much just to make the lease. Even the tourists mentioned that on CTV the other night they won’t pay the extra and they see the decline happening over several visits which is what attracted them in the first place.

It’s funny though, all I read on the local blogs is how all these high paying high tech jobs is keeping the core going with the shoebox condos but it sure seems they are spending their cash elsewhere….or maybe on maxed out mortgages and HELOC’s.

Bottom line, a major price correction as per early 80’s has to occur to flush out the greed and re-balance the growth so people will spend their cash in small shops for a slight extra cost for the better quality because they can afford to. Right now they can’t.

#189 GG Every job on planet Earth is an internal job until we start exporting to Mars.

So it really makes no difference if india and china has job growth via exports compared to the US or Canada. So Canada and the US becomes rich if more and more manufactoring and exports jobs dont exist. Great i love your way of thinking.
——————————————–

As a former Island dweller…..I second that. We moved to the mainland because the Island was dying and we are starting up a manufacturing business on the mainland. Manufacturing is dead dead dead…..I only hear about “govt contracts” where people are working which is of course “ANTI-GDP”. Building crap for the govt does not “create wealth” it steals it away from tax payers…….I will admit I am bias against imperial military spending(F-35s, ships etc etc) AND I am ex-military so I have a right to that opinion.

Derick R at 214 did a great job of proving to GG that real wealth does NOT depend on exports. (Earth is clearly wealthy but exports nothing).

In Economics 101 I was taught that exports are over-rated in that exports mean foreigners are the ones enjoying the fruits of a country’s labour. Good point. Balanced imports and exports make more sense.

Colonies back in the day exported much but were being exploited.

Also manufacturing does not create wealth any more so than service jobs. Wealth is what we value. If society values a haircut more than a widget so be it. Our food clothing and shelter needs long since met, many of us spend on services and baubles. So be it.

Doomers who are counting the U.S. economy out were wrong in 2008 and are wrong now. I write this from Manhattan which is booming. (And not a manufacturing job in site, but New York “exports” a huge amount of financial services.

#220 Shawn,
The us creats plenty of exports – debt. Selling to one another within the country creates no real wealth. The US is still is betting that the consumer will pull it out of the recession. Debt and consumerism doesnt trump investment and production.

on Roubini:
He wrote that a year ago and was, typically, wrong. — Garth
—————————-
I attended one of his lectures. The guy is amazingly down to earth and remarkably driven by facts and reason. I think that he is usually very correct with grasping the trends. Timing is different matter but I don’t think any serious analyst would:
– pretend to time the market
– analyze based on cherry picking of data.

I am sorry but I see the latest frequently on this blog. And very little touch on the fundamentals – real inflation, growth, resource and commodities shortage. Based on real non-doctored numbers and facts.

And I sorry again but in the absence of such analysis most of the views including in the investment of financial instruments constitute pure pumping not much different than the one in precious metals with strangely is condemned on this blog.

Berkshire Hathaway, when Buffett took over in 1965, was strictly a manufacturer (of textiles – to be precise – draperies and suit liners).

Buffett soon got it into service industries primarily insurance and banking at first. It still does some but little manufacturing these days. But it’s worked out pretty well for Buffett and the country. It now employs over 250,000 people.

How can you take any commentary seriously that says: “These media corporations’ task is to use propaganda and misinformation to protect the interests of the status quo. The ruling class has the power to manipulate public opinion, obscure the truth, alter government data, and outright lie.” It’s the definition of tin foil. — Garth

I live in Southeast Vancouver Garth, a portion of the city that has 10-15 year old homes with market values at 1.5-2.7 million. Now here’s the problem. No one is interested in living anywhere in Fraserview for over a million and certainly not en masse. There is no demand to fullfill the oversupply to market when boomers become illiquid in this asset class. So what happens to prices. They will come down. One hundred percent they come down as demand is choked off. Oversupply and no demand means prices must come down. No matter how much you spent on renovations and upgrading. The greatest shock awaits Scamcouver neighborhoods like these where people have this sort of sense of entitlement to exponential gains on scam real state. There exists no major demand for boomer estate foreclosures anywhere in Scamcouver. Vancouver is a complete Scam when it comes to real estate. The biggest lie/fraud/scam in real estate history is hedging against a major collapse in Vancouver. Vancouver will continue to fall for the foreseeable future.

#216 GG on 03.31.13 at 4:12 pm wrote#189 GG Every job on planet Earth is an internal job until we start exporting to Mars.

So it really makes no difference if India and China has job growth via exports compared to the US or Canada. So Canada and the US becomes rich if more and more manufacturing and exports jobs don’t exist. Great i love your way of thinking.

Well, thanks. Except it’s all your way of thinking. All I did was show why it smells so bad.

#222 GG on 03.31.13 at 5:17 pm wroteSelling to one another within the country creates no real wealth.

So you seem to be saying that when a Canadian potash miner sells fertilizer to a Canadian farmer and the Canadian farmer sells the resulting food back to the miner, nobody is any wealthier. On the other hand when the Canadian potash miner sells fertilizer to an American farmer instead of the Canadian farmer, Canadians are wealthier even though the Canadian farmer can’t grow so much food and both Canadians may now have to import their food from the US.

I keep reading about how housing in Victoria is in dire straights because there are no buyers and so many sellers. I don’t know about the buyers but after touring around the city yesterday and today, all I can say is that have never seen so few houses for sale at this time of year. The forest of for sale signs I expected to see simply aren’t there. What I do see is more for rent signs than usual. However, those properties look like they’ve been rentals for some time–poorly cared for yards, bldgs not kept up. There were some sold signs. Nothing scientific about this but I’ve lived in Victoria a long time and have seen what happens with the seasonal real estate market. Decent jobs have always been hard to come by. Most seem to be in the service industry and are temporary and poorly paid. Tourism has served the downtown core but doesn’t have much to do with the rest of us. The Uptown Centre will have some impact, for awhile, but there are already shops there that have gone out of business. The downtown core depended on tourists and I doubt if tourist are going to go to the Uptown Centre. What seems to be killing the downtown core is the fall off in tourists from the USA. Now that the US dollar is worth more than the Loonie, that may change a bit. Not much industry here.
The big market for housing has always been retirees. They’ll sell the prairie farm and pay with cash.

That’s because all the smart people sold all their houses in Victoria already. Most of the people who bought in the last 5 years will have no choice but to declare personal bankruptcy. The smart people won’t make the same mistake many Americans made. They’ll declare personal bankruptcy as soon as possible rather than hold out and work until their last dieing day. Many people forget their were two lessons to be learned from the collapse in American real estate. The second part is walk away from “your” house as soon as possible by declaring personal bankruptcy.

As a former Island dweller…..I second that. We moved to the mainland because the Island was dying and we are starting up a manufacturing business on the mainland. Manufacturing is dead dead dead…..I only hear about “govt contracts” where people are working which is of course “ANTI-GDP”. Building crap for the govt does not “create wealth” it steals it away from tax payers…….I will admit I am bias against imperial military spending(F-35s, ships etc etc) AND I am ex-military so I have a right to that opinion.

What do you manufacture?– Garth
————————————————-
Forestry and sawmill related products…..

How can you take any commentary seriously that says: “These media corporations’ task is to use propaganda and misinformation to protect the interests of the status quo. The ruling class has the power to manipulate public opinion, obscure the truth, alter government data, and outright lie.” It’s the definition of tin foil. — Garth

I do not agree that: “These media corporations’ task is to use propaganda and misinformation to protect the interests of the status quo.” I am of the belief that their task is now to use their message to procure advertising dollars, which in turn skews the integrity of the journalism. How can a person read any paper, such as the Edmonton Sun for example that is half auto advertising and not have issues when their auto reviews are nothing but cheerful applause of every new piece of sh!t that comes out.

Do not dismiss the entire message because an isolated portion sounds “bat sh!t crazy.”

How can you take any commentary seriously ….. and outright lie.” It’s the definition of tin foil. — Garth

Unless they report on a surging real estate market in the West or offshore investors impacting a local market or the safety of wealth in housing.
You want it both ways. To pick and choose the lies you embrace is the definition of hypocracy.
All our news is spun to reflect the interests of those who write the story.

There is now record all-time high in food stamp usage. Nearly 48 million Americans are using government assistance to buy food. How can there be a “recovery” in the economy with that kind of statistic?

Real Estate investor Fabian Calvo says, “Trust me; there are enough troubled assets for the Fed to be buying much more than $40 billion a month. . . It’s all about manipulation.” Calvo says, “In essence, they are creating another bubble. I believe in 24 to 48 months, they are going to pull the rug out again, and we’ll see prices go down when rates go up.” Calvo predicts, “The Fed balance sheet will likely be $5 trillion in toxic assets by the end of 2014.” Calvo thinks what is going on behind the scenes will one day come to light, and it won’t be pretty. Calvo thinks the mortgage rate forecast will eventually go up, but the Fed will suppress rates as long as it can. Calvo says, “It’s kind of like Enron. When it falls apart, then you realize what level of corruption and deceit was really taking place. . . . It’s a trillion times worse than Enron.”

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.